and Assume that, on January 1, 2010, a parent company acquires a 70% interest in its...

  

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and Assume that, on January 1, 2010, a parent company acquires a 70% interest in its subsidiary. The total fair value of the controlling and noncontrolling interests was $480,000 over the book value of the sub- sidiary's Stockholders' Equity on the acquisition date. The parent assigned the excess to the following [A] assets: [A] Asset Patent. Goodwill Initial Fair Value $320,000 160,000 $480,000 Useful Life 8 years Indefinite X 70% of the Goodwill is allocated to the parent. The parent and the subsidiary report the following pre-consolidation financial statements at December 31, 2016. HUHT Income statement: Sales. Cost of goods sold. Gross profit. Income (loss) from subsidiary Operating expenses. Net income. Statement of retained earnings: BOY retained earnings. Net income. Dividends EOY retained earnings a. b. 8. C. e. d. Parent $6,000,000 (4,000,000) 2,000,000 112,000 (1,500,000) $ 612,000 Subsidiary $2,400,000 $2,000,000 (1,200,000) 800,000 (600,000) $ 200,000 $1,978,000 $970,000 612,000 200,000 (190,000) (100,000) $1,070,000 Balance sheet: Cash..... Accounts receivable Inventory. Equity investment. Property, plant and equipment (PPE), net .. Current liabilities. Long-term liabilities Common stock. APIC. Retained earnings Parent $ 200,000 600,000 800,000 1,400,000 2,000,000 $5,000,000 $500,000 1,100,000 600,000 Subsidiary $ 120,000 400,000 880,000 1,200,000 $2,600,000 $ 200,000 600,000 280,000 400,000 450,000 2,400,000 1,070,000 $5,000,000 $2,600,000 Disaggregate and document the activity for the 100% Acquisition Accounting Premium (AAP), the controlling interest AAP and the noncontrolling interest AAP. Calculate and organize the profits and losses on intercompany transactions and balances. Compute the pre-consolidation Equity Investment account beginning and ending balances starting with the stockholders' equity of the subsidiary. f. Independently calculate consolidated net income, controlling interest net income and noncontrolling interest net income. Reconstruct the activity in the parent's pre-consolidation Equity Investment T-account for the year of consolidation. Independently compute the owners' equity attributable to the noncontrolling interest beginning and ending balances starting with the owners' equity of the subsidiary. Complete the consolidating entries according to the C-E-A-D-I sequence and complete the consolidation worksheet. and Assume that, on January 1, 2010, a parent company acquires a 70% interest in its subsidiary. The total fair value of the controlling and noncontrolling interests was $480,000 over the book value of the sub- sidiary's Stockholders' Equity on the acquisition date. The parent assigned the excess to the following [A] assets: [A] Asset Patent. Goodwill Initial Fair Value $320,000 160,000 $480,000 Useful Life 8 years Indefinite X 70% of the Goodwill is allocated to the parent. The parent and the subsidiary report the following pre-consolidation financial statements at December 31, 2016. HUHT Income statement: Sales. Cost of goods sold. Gross profit. Income (loss) from subsidiary Operating expenses. Net income. Statement of retained earnings: BOY retained earnings. Net income. Dividends EOY retained earnings a. b. 8. C. e. d. Parent $6,000,000 (4,000,000) 2,000,000 112,000 (1,500,000) $ 612,000 Subsidiary $2,400,000 $2,000,000 (1,200,000) 800,000 (600,000) $ 200,000 $1,978,000 $970,000 612,000 200,000 (190,000) (100,000) $1,070,000 Balance sheet: Cash..... Accounts receivable Inventory. Equity investment. Property, plant and equipment (PPE), net .. Current liabilities. Long-term liabilities Common stock. APIC. Retained earnings Parent $ 200,000 600,000 800,000 1,400,000 2,000,000 $5,000,000 $500,000 1,100,000 600,000 Subsidiary $ 120,000 400,000 880,000 1,200,000 $2,600,000 $ 200,000 600,000 280,000 400,000 450,000 2,400,000 1,070,000 $5,000,000 $2,600,000 Disaggregate and document the activity for the 100% Acquisition Accounting Premium (AAP), the controlling interest AAP and the noncontrolling interest AAP. Calculate and organize the profits and losses on intercompany transactions and balances. Compute the pre-consolidation Equity Investment account beginning and ending balances starting with the stockholders' equity of the subsidiary. f. Independently calculate consolidated net income, controlling interest net income and noncontrolling interest net income. Reconstruct the activity in the parent's pre-consolidation Equity Investment T-account for the year of consolidation. Independently compute the owners' equity attributable to the noncontrolling interest beginning and ending balances starting with the owners' equity of the subsidiary. Complete the consolidating entries according to the C-E-A-D-I sequence and complete the consolidation worksheet.